The paradox of oil and aid – securing the future!
IN July 1960, in the Rockefeller Center in New York, the new chief executive of Exxon, Monroe Rathbone, faced a decision which he knew would have world-wide implications. Rathbone was a man who had come up through the traditional pipeline; educated as a chemical engineer, he had worked his way to the top of Standard Oil of Louisiana. He made his adopted home in Baton Rouge, the great refinery centre, before he moved over to Exxon in New York. He was not a man of great international sensitivity; but he was regarded as one of the more far-sighted of Exxon’s bosses, with a reputation for taking advice from others.Rathbone’s problem was the glut. It was bringing about price-cuts all over the world, and the Russians, as he saw it, were using oil to upset the economy of the West with dangerous results. (Benjamin Shwadran: The Middle East, Oil and the Great Powers (revised edition) New York, 1973, P. 536.) In Italy, Mattei had just made a deal with the Russians to buy crude oil at sixty cents below the Middle East price; in Japan, oil was being sold at huge discounts, made more damaging because they were publicly known. Worse still, the Russian oil was now invading India as had happened in Deterding’s price-war in the ‘twenties. The Indian government had told the three big refineries — each owned by one of the sisters — that they had been offered Russian oil cheaper than the oil from the parent sisters, forcing the companies to undercut their own posted prices. For Rathbone this was the most serious aspect: ‘the tremendous amount of price discounting to third parties,’ he told a reporter, ‘is bad enough. If it now spreads to affiliates, the fat’s in the fire.”